Organise your venture like the best tech firms. A case for open allocation

While searching for a business model or executing one, every team has to have a shared purpose; a reason why they do things together. The more clear the WHY is, the better chances for the team to perform. Sometimes this WHY can be easily expressed as vision+mission. The vision is a future we all see together; the mission is the role we play in making that future happen.

I love keeping things simple and meaningful, therefore I use a lot 2 frameworks:

> why/how/what

> autonomy/mastery/purpose

There is one important issue — the team culture — that we’ll dig into deeper on the next occasion.

Once we know the WHY of us working together, let’s see HOW we can work together. The most popular option is Closed Allocation, but recently other forms of organisation made a comeback. Mind you, these are not necessarily new, the humanity used at least some similar patterns since the dawn of our species. Holacracy, Agile Teams and Open Allocation are some examples. Today we’ll talk about Open Allocation, the organisational model for Valve and GitHub.

How VALVE works?

  • You need to pick your own projects.
  • If you’re working here, that means you’re good at your job.
  • Of all the projects currently under way, what’s the most valuable thing I can be working on?
  • The leads serve the team, while acting as centers for the teams.

Closed allocation is the traditional system of having organizational leaders translate a company’s mission into a specific set of priorities and projects, then creating a management layer to break these down into tasks, which are then delegated to employees.

If people aren’t told what to do, they’ll do the wrong thing. If they aren’t monitored and prodded, they won’t do anything at all.

Open allocation is a radically different system of having organisational leaders communicate the company’s mission to all employees, skipping the management layer, and offering the employees complete self-direction and self-organisation.

If people buy into our goals and apply their passion and talent, they’ll uncover paths to success that we can’t even envision.

In a closed allocation system, people compete for the right to work on good ideas, while in an open allocation system, ideas compete for the right to have people work on them.

People ask this quite often: how do I know who to fire? You’ll fire fewer than you’d think. People will find more ways to contribute in an open allocation system than if they’re pigeonholed into a rigidly-defined role. Open allocation systems only let go of the people who are so political, passive aggressive, or poorly-performing as to cause a serious morale drag amongst your other team members. It will be obvious who doesn’t fit in your open allocation system, because their team will share a set of concerns and will have tried everything they could think of to make them successful.

Can you just use some components of open allocation? No, it’s a package deal.

When open allocation is in play, projects compete for engineers, and the result is better projects. When closed allocation is in force, engineers compete for projects, and the result is worse engineers.

Open allocation does not mean “everyone gets to do what they want”. A better way to represent it is: “Lead, follow, or get out of the way” (where “get out of the way” means “leave the company”). To lead, you have to demonstrate that your product is of value to the business, and convince enough of your colleagues to join your project that it has enough effort behind it to succeed. If your project isn’t interesting and doesn’t have business value, you won’t be able to convince colleagues to bet their careers on it and the project won’t happen. This requires strong interpersonal skills and creativity. Your colleagues decide, voting with their feet, if you’re a leader, not “management”. If you aren’t able to lead, then you follow, until you have the skill and credibility to lead your own project. There should be no shame in following; that’s what most people will have to do, especially when starting out.

Who does the scut work?” The answer is simple: people do it if they will get promoted, formally or informally, for doing it, or if their project directly relies on it. In other words, the important but unpleasant work gets done, by people who volunteer to do it. I want to emphasise “gets done”.

There are four types of projects:

1 Important and interesting projects are never hard to staff.

2 Unimportant but interesting projects are for 20% time; they might succeed, and become important later, but they aren’t seen as critical until they’re proven to have real business value, so people are allowed to work on them but are strongly encouraged to also find and concentrate on work that’s important to the business.

3 Important but unpleasant projects are rewarded with bonuses, promotions, and the increased credibility accorded to those who do undesirable but critical work.

4 Unimportant and unpleasant projects, under open allocation, don’t get done.

What are the problems with open allocation? The main issue with open allocation is that it seems harder to manage, because it requires managers to actively motivate people to do the important but unpleasant work.

The human aspect is important in Open Allocation and to build a great team you have to take into consideration the 4 typologies of people:

Substractors — everybody starts here — the input they require is greater than their output. Based on how fast and well they learn to function within the team, usually 6 months, they shift to Adders. In an Open Allocation setup, most go beyond that and can become Multipliers.

Dividers are the people who make whole teams less productive. Unethical people are dividers, but so are people whose work is of so low quality that messes are created for others, and people whose outsized egos produce conflicts. Long-term (18+ months) subtractors become “passive” dividers because of their morale effects. Dividers smash morale, and they’re severe culture threats, capable to take down entire companies.

A straightforward way to put the difference between Closed and Open Allocation is:

“when you manage people like children, that’s what they become. Treat employees like adults, and that’s what they’ll be.”

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P.S. For people who think product, we’re running a Digital Product Masterclass this spring — have a look and help us improve it.

Glu Labs

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